US sanctions cast doubt on Shell’s chances of buying into Russian field

US sanctions announced last week against a Russian offshore field could derail a planned project alliance between Shell and Russia’s Gazprom, industry experts said on Monday.

Under the sanctions, applied because of what the US sees as Russian political and military interference in Ukraine, there will be strict restrictions on exports, re-exports and transfers of technology and equipment to the Yuzhno-Kirinskoye field 35 kilometres offshore Sakhalin Island.

The ban covers US origin items or non-US origin items containing more than 25 percent US content.

Even though Shell is an Anglo-Dutch firm it has considerable assets in the US, and would face consequences if it went against the sanction, as would other potential foreign investors.

Last week Shell was believed to be considering taking up a Gazprom offer to buy a stake in the field (also known as Sakhalin 3).

Shell had pre-existing deals to work with Gazprom in other fields but those would not be impacted by these sanctions, which relate only to new projects.

Donal Scully

With 28 years experience writing and editing for newspapers in the UK and Hong Kong, Donal is now based in California from where he covers the Americas for Splash as well as ensuring the site is loaded through the Western Hemisphere timezone.
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